North Carolina Law Life » Durham

MLK Day Musing: Does Your Business Give Back?

Donna Ray Berkelhammer — Mon, 16 Jan 2012 16:30:52 +0000

Martin Luther King Day has become a day of service for many communities and individuals. It made me think: what are businesses doing to give back? One strong Triangle trend is social entrepreneurship and its related focus on the triple bottom line.

I am inspired by entrepreneurs who base their business model on improving the wider community/environment.

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In August 2010, our legislature became one of the first to enact the low-profit limited liability company (L3C), which is a hybrid business form combining profit-making with socially responsible missions. It can be the perfect venture for educational, scientific, literary or religious businesses that don’t want the hassle of complying with non-profit reporting requirements, or that have some activities that are not permitted by the federal tax code.

The L3C can be structured to take advantage of both non-profit and for-profit sources of capital. It may offer marketing advantages by attracting socially aware investors and partners. It may also attract private foundation program-related investments.

The biggest disadvantage, however, (and this is not a small disadvantage) is that the federal tax authorities have not ruled whether investments in L3Cs qualify as program-related investments.

We have a wide range of supports here for social entrepreneurship, including informal meet-ups. formal academic programs at Duke and UNC, community-based efforts to increase and support social entrepreneurism, and paid consultants.

How is your business giving back on a day-to-day basis?

One Entrepreneur Greets MLK Day with Work (smallbiztrends.com)
United Way Triangle MLK Day of Service (unitedwaytriangle.org)
Thousands In Triangle will Volunteer on MLK Day (nbc17.com)
For-Profit Social Entrepreneurs (wealthartisan.com)
The Rise of the Charitable For-Profit Entity (forbes.com)

L3C and B-Corps

Donna Ray Berkelhammer — Fri, 04 Mar 2011 21:04:49 +0000

Anyone who is at all active in the Triangle business community knows we are a breeding ground for social enterprise – companies that are formed to achieve a social purpose as well as make a living for the founders. Social entrepreneurs have two cutting edge resources to available to them in North Carolina — the L3C and the B corporation. I was quoted today in an article in the Triangle Business Journal about low-profit limited liability companies, known as L3Cs.

L3Cs are limited liability companies that have both a profit-purpose and a charitable or education purpose. They were approved by the legislature on August 1, 2010. About a dozen have been formed to date here. They are intended to attract investment and funding sources that may not be available to traditional for-profit entities.

Proponents would like the L3C to become the entity of choice for “program-related investments” (known also as PRI) from private foundations. Private foundations are required by the IRS to distribute a percentage of their funds each year, either through grants, loans or other investments for mission-related activities (i.e., program-related investments). Few private foundations make loans or investments because it is cumbersome and regulation-heavy. It is easier to give outright grants. Because the L3C authorizing statutes contain certain PRI language from the Internal Revenue Code , proponents hope private foundations will begin considering funding mixed use for-profit/charitable projects by investing in L3Cs. They are lobbying to get federal tax recognition for the PRI investments in L3Cs.

Another cutting edge social enterprise concept is the B-Corporation (“B” standing for Benefit). Currently, B-corporations are not recognized via a specific statute in North Carolina, but a bill has been introduced in the North Carolina senate to recognize benefit corporations. Companies, however, can voluntarily be certified as B-corporations by B Labs, a non-profit organization. The impact of being a “B Corp” now is like having a “Good Housekeeping Seal of Approval” — it is a certification from an independent third-party acknowledging your company’s commitment to serving society and the environment. B Corps do not receive any specific tax breaks at the state or national level.

Current corporation law is arguably geared toward maximizing profits for shareholders. The L3C statute and proposed Benefit Corporation statutes are geared at making it acceptable legally for a company to focus on a social goal, perhaps to the detriment of the profit motive. The L3C statute, for example, clearly states that the company should operate so that “no significant purpose of the company is the production of income or the appreciation of property.” It allows the owner to focus on meeting the social purpose without having to focus exclusively on return on investment. The company is in no way prohibited from being profitable; it should not be the main focus.

It is thrilling as a lawyer to be involved at the inception of a new entity — particularly one that will help people “do well by doing good.”

What Makes the Triangle Attractive for Entrepreneurs?

Donna Ray Berkelhammer — Thu, 04 Nov 2010 19:15:55 +0000

Fast Company magazine just featured Raleigh-Durham as a meaningful entrepreneurial hub because of its collaborative community, infrastructure, university R&D, educated workforce, and quality of life. What do you think makes us special for startups and entrepreneurs?

Corporate Legal Clinic on October 22, 2010

Donna Ray Berkelhammer — Mon, 04 Oct 2010 10:53:28 +0000

Small business owners in the Triangle are invited to attend a free corporate legal clinic on Friday, October 22, 2010, sponsored by the Durham County Bar Association, North Carolina Lawyers for Entrepreneurs Assistance Project (NC LEAP) and the Small Business Center at Durham Technical Community College.

This is the place for you if:

You are thinking about starting a business and have questions for an attorney;
You tried to form your own corporation or LLC and don’t know if you did it right;
You have a contract to be reviewed;
You have questions about how to protect your company’s name or other intangible assets;
You need help collecting money from your customers;
You’ve received a legal notice you don’t understand;

A Break From Our Regular Programming to Support Only Burger

Donna Ray Berkelhammer — Tue, 31 Aug 2010 17:39:17 +0000

Local gourmet food truck Only Burger is aspiring to be a contestant on the Great Food Truck Race, a reality show on Food Network.

Do You Want Text With That?

Donna Ray Berkelhammer — Fri, 27 Aug 2010 16:41:20 +0000

I’ve been thinking about communication lately.

Two Cool Things Happening in Durham, NC

Donna Ray Berkelhammer — Thu, 18 Mar 2010 14:13:48 +0000

First, you can participate in the effort to bring Google Fiber to Durham today at 11 a.m. Google is looking for a test community where it can launch its ultra-high-speed broadband network. Durham wants to be that community.

Today is Google Day at the Durham Bulls Athletic Park. Show up wearing Google colors (red, blue or yellow) or black, and be part of an aerial picture of people spelling out “We want Google.”

Use the Jackie Robinson and Blackwell entrance. The picture should be taken at noon, sharp. For more insight into the Durham effort, check out Bull City Rising (which I recommend generally anyway).

The second interesting thing going on is that the Duke Lemur Center is in the running for a $50,000 Pepsi Refresh Project Grant so it can increase awareness of the lemur’s plight and inspire people to take action to help lemurs and other endangered species.

For more information: click here

Durham: 15th-Best Midsized Metro Area to Launch a Business

Donna Ray Berkelhammer — Thu, 15 Oct 2009 12:51:25 +0000

Fortune Magazine this week issued its list of best metro areas in which to launch a business. Durham is 15th on that list for midsized areas.

Here is what Fortune said:

To hear local entrepreneurs tell it, Durham is putting the D in diversity. Once known for tobacco and textiles, today it’s part of The Research Triangle, the world’s largest research and development center. The city is home to an array of high-tech, medical and financial services companies, as well as federal agencies and educational institutions.

The locals are a highly educated bunch: Duke University, North Carolina Central University and Durham Technical Community College employ and train area residents. Business support organizations like the Institute for Minority Economic Development and the Women’s Business Center offer the resources entrepreneurs need to thrive.

The city’s strong sense of community helps its assorted enterprises and individuals come together. It’s the kind of place where businesses embrace struggling local schools by donating supplies, volunteering classroom speakers and hosting field trips.

Living, business and construction costs remain low compared to national averages. Another local perk: Durham offers plenty of ways to unwind after a hard day’s work, from kayaking and hiking to performance art and gallery tours.

I’d love to hear from people who have started in Durham and in other places. What has the Bull City experience been like?